Stock To Watch: JinkoSolar (JKS) In Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified JinkoSolar ( JKS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified JinkoSolar as such a stock due to the following factors:

  • JKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.5 million.
  • JKS has traded 293,402 shares today.
  • JKS is down 3.3% today.
  • JKS was up 5.7% yesterday.

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More details on JKS:

JinkoSolar Holding Co., Ltd., together with its subsidiaries, engages in the design, development, production, and marketing of photovoltaic products in the People's Republic of China and internationally. The company operates through two segments, Manufacturing and Solar Power Projects. JKS has a PE ratio of 9. Currently there are 5 analysts that rate JinkoSolar a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for JinkoSolar has been 912,800 shares per day over the past 30 days. JinkoSolar has a market cap of $903.7 million and is part of the technology sector and electronics industry. Shares are up 55.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates JinkoSolar as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 36.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for JINKOSOLAR HOLDING CO is rather low; currently it is at 20.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.85% significantly trails the industry average.
  • The debt-to-equity ratio is very high at 2.50 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, JKS has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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